You are the owner of this page.
A1 A1
ERIN GRUGAN / For the Press  

With Westampton Tech defenders in pursuit, Mainland’s Camryn Dirkes powers forward for a lay-up. (ERIN GRUGAN / For the Press)

Atlantic City's economic outlook clouds improved financial picture

ATLANTIC CITY — The city is making incremental progress toward economic stability, but its long-term fiscal health remains a cause for concern.

A third consecutive year of stable or reduced municipal taxes is being discussed, city and state officials have exercised fiscal restraint on basic budgetary matters and the more pressing economic issues that prompted a 2016 state takeover to avert bankruptcy have been addressed.

However, those efforts may prove to be inadequate long-term remedies because of looming debt obligations totaling more than $400 million and the pressing need for additional sources of revenue.

The end result may very well be prolonged state involvement in Atlantic City even after the conclusion of the five-year timetable granted under the Municipal Stabilization and Recovery Act.

“It would not be unusual (for the state to continue its oversight),” said Marc Pfeiffer, assistant director of the Bloustein Local Government Research Center at Rutgers University and former deputy director of the state Division of Local Government Services. “(New Jersey) has had municipalities under degrees of supervision for many years, (and) every case is different.”

Pfeiffer noted that the state’s transition report on Atlantic City, which was co-authored in 2018 by Special Counsel Jim Johnson at Gov. Phil Murphy’s request, has expanded Trenton’s role in the seaside resort into quality-of-life issues.

“Now that we’ve extended the state’s engagement beyond just fiscal conditions, (they) want to make sure that those seeds they planted take root and start to grow on their own,” Pfeiffer said. “And it may be that the state wants to stay engaged in Atlantic City longer.”

Meanwhile, city officials — who must have any legislative or executive action approved by the state Department of Community Affairs — have tried to address some of the fiscal missteps that put the city on the brink of bankruptcy in 2015.

Following years of rising municipal taxes — between 2010 and 2016 the local tax rate increased 96 percent — city officials are close to introducing a budget that would either reduce taxes or keep them at the same level for the third straight year.

Council President Marty Small Sr. said he is “100 percent certain” of at least a flat municipal budget for 2019.

“There will be no tax increase on the residents of Atlantic City,” said Small, who also serves as chairman of the Revenue and Finance Committee, during a recent public meeting. “The budget is always a working document ... (but) we’re going to continue to make sound fiscal decisions.”

In 2017, the first full year of the state takeover, Atlantic City approved the first reduction in the municipal rate tax rate since 2008. Last year, the city adopted a $220 million operating budget while holding the municipal tax rate flat.

Lisa Ryan, spokeswoman for the state agency that oversees the city’s finances, said the DCA is continuously “working with the city to reduce costs all around.” Ryan said state and city officials have been working to finalize the 2019 budget but they are “not quite there yet.”

The city’s newfound fiscal discipline is evident in the routine practice of awarding contracts for professional services, such as those paid to outside law firms.

City Council decreased the total amount awarded for legal services by $500,000 for 2019 by awarding $2.47 million in contracts for the upcoming year. Last year, the governing body awarded more than $3 million for legal contracts and spent $2.97 million. In 2017, council awarded more than $2.95 million for legal contracts while only appropriating about $1.74 million for work done.

Council has not approved a change order for legal services — when a vendor bills more for services than contracted and a governing body must allocate additional funding — since 2016, Small said.

“It’s simple — we changed the culture,” said Small. “That’s this (governing) body looking out for the taxpayers’ best interest.”

Despite the changes, the city’s fiscal history is catching up quickly.

According to financial statements, Atlantic City’s total municipal bond debt was $408.7 million and the school district was responsible for another $67.5 million. In February 2018, City Council, with the state’s approval, issued $49 million in bonds to pay deferred pension and debt obligations from 2015.

In 2019, the city’s municipal bond obligations will be slightly more than $15.2 million. Atlantic City’s debt service payments will continue to rise each year until it peaks in 2026 with an annual obligation of $26.9 million. The following year, the city’s debt payment drops to $14.4 million, a figure it will pay annually until 2036.

But a long-term plan for Atlantic City — which lost a significant portion of its tax revenue when the casino tax appeals were settled — to meet its obligations still needs to be formulated.

“We recognize the city’s debt service is an important issue, and it is one that is not being ignored,” said Ryan. “Once the city budget is nailed down, we will be in a better position to speak about the city’s debt service payments and the work that is being done to help the city responsibly pay down its debt.”

What's next for B.L. England plant site? First, a cleanup.

UPPER TOWNSHIP — Will the 368-acre site of the B.L. England electric plant, due to close in May, become a hub for offshore wind developers — a place for them to feed their power into the grid?

Or could its waterfront on the southern rim of the Great Egg Harbor Bay be used for recreation, after almost 60 years as a power plant?

Russell Arlotta, of owner Rockland Capital’s R.C. Cape May Holdings, said he cannot speak to specific uses of the site in the future.

“We have no firm plans, and are not prepared to comment on that,” Arlotta said.

But he said a cleanup will be completed by the end of 2019.

The company began cleanup of contamination at the site as soon as it purchased it from Atlantic City Electric in 2007, said Arlotta.

“We’ve been doing remediation through some nationally recognized remediation firms over the past 12 years,” said Arlotta. “There are two areas to remediate after operations shut down, because they involve operational areas.”

He said cleanup of those two areas will involve removal and replacement of contaminated soils, along with longer-term groundwater monitoring.

Mayor Rich Palombo said he sees his role as protecting the township’s residents.

“There are environmental wastes that happened over years. The plant used coal and used oil. There are things in that soil that need to be addressed. Those kinds of things,” Palombo said.

R.C. Cape May announced Feb. 28 it was abandoning plans to repower the plant. It will close in May under an agreement with the state, which required it to either repower or close because its outdated technology released too much pollution into the air.

The company also asked to withdraw from a lawsuit defending South Jersey Gas’ right to build a natural gas pipeline to the plant.

The Danish offshore wind company Orsted, which holds a lease to develop a wind farm off Atlantic City, has said it is looking at the site as a potential place to bring its electricity to market if it wins ratepayer subsidy. But it is also considering hooking into the grid at the former Oyster Creek nuclear plant site in Ocean County.

Palombo said B.L. England is the better choice: “Because of the close proximity of where the wind turbines are going to be, it makes more sense to take a giant extension cord to Beesleys Point than to Lacey Township.”

The state Board of Public Utilities is due to make a decision by July 1 on which company or companies to award taxpayer subsidies for construction of the first 1,100 megawatts of offshore wind electricity generation.

“If I had crystal ball, it would be a lot easier (to know what’s next for the site),” said Palombo. “And I don’t.”

One thing is clear: State law requires the township continue to get more than $6 million a year in energy receipts payment it has received as host of the plant.

“It’s a shame we couldn’t have had this thing,” said Palombo of the converted natural gas plant. “It’ll be another challenge for Upper Township.”

Palombo said there will be a loss of jobs at the plant, but he is hopeful that will be more than made up by new jobs in the offshore wind industry.

“You don’t ever want to see anybody lose their jobs,” said Palombo, “but on the flip side, the conversations I have had informally with Orsted and some of those companies — they anticipate a huge amount of hiring to get them through the building and construction process.”

Sierra Club New Jersey Director Jeff Tittel said his organization has been fighting to close the B.L. England plant — which was the oldest coal-fired plant in New Jersey when it was in operation — for more than 20 years.

R.C. Cape May’s decision not to repower with natural gas not only ensured the plant would close, but also that the South Jersey Gas pipeline would not be built.

Its 22-mile route from Maurice River Township to the plant would have passed along roadsides through 10 miles of protected Pinelands forest and was hotly opposed by environmentalists.

It had, however, received approvals from the state Department of Environmental Protection, the state Board of Public Utilities and the Pinelands Commission, but faced lawsuits.

“We started fighting B.L. England in 1998, when they put in a new boiler,” said Tittel. The modification meant the plant was no longer grandfathered under the Clean Air Act, he said.

“So we went to DEP, and then EPA, and filed suit,” said Tittel. “The EPA required New Jersey to force the plant to clean up or shut down by 2007, but the administrative consent order kept getting extended.”

Then the plant announced it would convert to natural gas, Tittel said, and the Sierra Club and others fought that.

“It was a 21-year battle. At the end of the day, we won,” said Tittel. “It would be great to see it as a facility for offshore wind. For me, it’s a major victory when you think of where we were in 1998.”

Atlantic City firefighter union sues the state

ATLANTIC CITY — The union representing the city’s firefighters has filed a complaint against the city and state over unfair promoting practices, compensation and unpaid raises.

International Association of Fire Fighters Local 198 filed the complaint Monday in state Superior Court alleging the city and the state Department of Community Affairs and Division of Local Government Services have failed to “act in good faith” when promoting firefighters to captains and failed to pay contractually mandated step raises.

The DCA said it is disappointed in the union’s decision to litigate rather than continue discussions it says have been taking place in good faith and on a regular basis.

“Since the passage of the MSRA, the state has been consistent across administrations with regard to hiring and promotional processes and finds the union’s comments in the complaint and in the press disingenuous,” a spokesperson for the DCA said.

The DCA was put in charge of overseeing day-to-day city operations under the 2016 Municipal Stabilization and Recovery Act.

The union has been in and out of court with the DCA the past three years over state-mandated changes to the department, including staff cuts, salary and benefits reductions and switching from a 42-hour work schedule to a 56-hour schedule.

John Varallo, president of the union, said the new lawsuit stems from inconsistent labor practices the Fire Department has had to deal with since the state takeover went into effect in 2016.

“These are problems that should have been taken care of in the first couple of months,” Varallo said. “Here we are two years later, still wasting taxpayer money and still wasting everybody’s time trying to figure out stuff that should have already been done.”

According to the complaint, the state allowed the Civil Service Promotional List to expire Jan. 6 and did not implement a traditional method afterward for assigning captain promotions.

Instead of using the promotion list, the state announced in late January it would hold interviews with all firefighters for captain promotions.

The interviews, which started in February, used unknown procedures and criteria, including having a firefighter from another city sit on the interview panel, according to the complaint.

“We’ve never discussed who goes on the panel, we don’t know how it’s graded, we don’t know the scoring system, we don’t know what questions they ask,” Varallo said. “We don’t know, is there an appeal process if they skip over somebody?”

Varallo said this kind of framework is important to ensure fair hiring.

“We can’t have somebody get skipped over because of the color of their skin, we can’t have somebody get skipped over because they’re a veteran, we can’t have somebody get skipped over who’s a woman,” Varallo said. “I need to have a mechanism in place so I can fight for her and get her position if she was wronged.”

The state contends this complaint is an example of the union’s “disingenuous” comments.

“Though Local 198 repeatedly pressed the city and state to advance promotions to fill permanent captain positions, it promptly complained that the city and state chose to interview all eligible candidates, rather than the limited list of the union’s preferred candidates,” the DCA spokesperson said.

Forty or 50 firefighters will be interviewed and some are being asked to sign confidentiality agreements or “gag orders” for the interview, according to the complaint.

The DCA said the confidentiality agreements were implemented to address a concern Varallo raised that the last candidates interviewed would have more time to prepare than candidates interviewed first because interview questions could potentially be spread through the ranks.

The union is asking that the court grant an injunction to stop the promotions and the interview process until all parties negotiate the procedures, standards, requirements and selection process used.

The complaint also alleges eight firefighters have had to take on the role of acting captains the past three years without receiving the benefits tied to that higher title.

The department has not permanently promoted any firefighters to the rank of captain in more than five years, court filings show.

The union also says the city and state did not pay contractually mandated step raises and a one-time $1,000 salary increase in 2016.

The 25 firefighters the union says are eligible for raises were hired in November 2011, January 2013 and May 2013 and have missed raises for 2016, 2017 and 2018.

“The state came in and implemented a whole new salary guide, and they haven’t even paid the step raises on their new salary guide,” Varallo said.

The state argues all the matters the union raises in its complaint were being addressed in ongoing discussions among the city, the state and the union.

“Despite being unable to reach consensus on some key issues, which has caused the union to complain about the length of negotiations, the city and state remained committed to good-faith negotiations with Local 198,” the spokesperson said.

Atlantic City schools may lose $12M in state's 2020 budget

The Atlantic City School District may lose $12 million in state aid it has been receiving to stabilize the tax base after casino tax appeals diminished revenue several years ago, according to Gov. Phil Murphy’s 2020 proposed budget.

According to the budget proposal, the community stabilization aid would drop from $32 million last year to $20 million in the 2019-20 school year. The funds made up a substantial portion of the district’s $162.5 million operating budget in 2018, and more than half of its total state aid this year.

School officials from Atlantic City did not respond Wednesday to a request for comment about the potential loss of state funds.

However, Atlantic City’s other state education aid is expected to increase as a result of the school funding reform bill passed over the summer, which eliminated growth caps for districts and phased out adjustment aid over a period of seven years.

During last year’s budget negotiations, school funding was part of a budget stalemate that shut down the government for several days in the summer. Eventually, the governor and the Democrats in the Legislature came to an agreement to revamp the funding formula to distribute more funds to those districts that had been underfunded for almost a decade — like Atlantic City — which meant decreasing aid to overfunded districts.

2020 Budget

In his 2020 budget, Gov. Phil Murphy called for a total of $15.4 billion to fund K-12 education next year, a $450 million increase in funding over the previous year’s budget. The funding includes a more than $280 million increase in total aid for primary and secondary education, an increase of $68 million toward preschool programs, $323 million in teacher’s pension funding, and $32 million in construction debt service funds.

“These commitments mean we can continue to be a national leader in the delivery of high-quality public education,” Murphy said Tuesday.

Total post-secondary education spending is proposed to increase by $30 million in next year’s budget, with most of the increases funneled into the state’s Community College Opportunity Grant. The grant was provided this year to local colleges as part of a $25 million free college pilot program.

Murphy said the funds will reach 18,000 students in the 2019-20 academic year at every community college. An additional $5 million is proposed for the Tuition Aid Grant program and $2 million for Educational Opportunity Fund grants.

Meanwhile, funding for the state’s public colleges and universities dropped by $12 million, but Murphy said that is because his administration is proposing a new, outcomes-based funding formula for these schools. This includes the redistribution of $15 million in operating aid and an additional $20 million in new funding, according to a budget document released by the Treasury.

“To access this funding, colleges will be required to commit to the Student Bill of Rights, the Financial Aid Shopping Sheet and other principles in the forthcoming student-centric state plan for higher education,” the document states.

“This is a first step in funding higher education through fairness, and not politics,” Murphy said, adding it is part of a yet-to-be released state plan on higher education.

The state has not released total aid figures for each school district and college, so the individual impact is not yet known.

Education advocacy groups responded Tuesday to the budget address with hope and cautiousness.

“This budget keeps us on the path of making up for almost a decade of neglect under former Gov. Christie and moves us toward the goal of full funding of school districts’ adequacy budgets under the (school funding) formula,” said David Sciarra, Education Law Center executive director.

He said the ELC remains concerned about the impact of school funding reform on districts already spending below what the state considers adequate per pupil.

The New Jersey Education Association, which represents the state’s teachers and support staff, called the budget “progressive” and “people-focused,” and applauded the increase in funding of public education and the pension system, but urged the administration to work with districts hurt by drastic budget cuts to ensure they have resources to provide a high-quality education.

Presidents of local community colleges praised the increase in the free college grant program.

“The Community College Opportunity Grants are removing a barrier for many who never thought that college was a possibility for them to attend; providing career and transfer opportunities for eligible students,” said Atlantic Cape Community College President Barbara Gaba.